Since the circle touches both the axes, the centre of the circle must lie on the line x+y=0 in the second quadrant, which is equidistant from both the co-ordinate axes. Let the centre be (-a,a) [x is negative and y is positive because the centre lies in the second quadrant] The radius of the circle will be the distance of the centre from either of the axes =a The equation of the family of circles will then be (x+a)²+(y-a)²=a²(i) Now, differentiate with respect to x and let dy/dx=y'
2(x+a)+2(y-a)y'=0
⇒x+yy'+a(1-y')=0
⇒a=(x+yy')/(y'-1)Substitute this value of a in (i)
(x+(x+yy')/(y'-1))²+(y-(x+yy')/(y'-1))²=((x+yy')/(y'-1))²
⇒(xy'-x+x+yy')²+(y(y'-1)-x-yy')²=(x+yy')²
⇒(xy'+yy')²+(y-x)²=(x+yy')²
⇒x²y'²+y²y'²+2xyy'²+x²+y²-2xy=(x+yy')²
⇒x²y'²+y²y'²+2xyy'²+x²+y²-2xy=x²+y²y'²+2xyy'
⇒y'²(x²+2xy)-2xyy'-y²+2xy=0The above is the differential equation for the given question.